The Premium Tax Section is responsible for the regulation of Surplus Lines brokers, including reporting and compliance, along with the collection of surplus lines premium tax revenue. Refer to Title 18, Delaware Insurance Code Chapter 19 for details of Surplus and Excess Lines regulation. Please note that this law was changed in 2011 to accommodate the mandates adopted by the federal government with the passage of the Nonadmitted and Reinsurance Reform Act of 2010 (“NRRA”).
Surplus Lines Broker Procedures Manual – Coming Soon – All parties involved in the surplus lines insurance business are expected to access and use this tool. This manual is being updated by the Department to assist and acquaint resident and non-resident Delaware Surplus Lines licensees and their staff with proper procedures.
Eligible Companies Listing – This list of companies approved in Delaware to provide insurance on a surplus lines basis is updated quarterly. It is the surplus lines broker’s responsibility to check the eligibility list before placing business with any insurer.
On July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. Contained in its entirety within that legislation was the Nonadmitted and Reinsurance Reform Act of 2010. That Act, referred to as the “NRRA”, placed surplus lines taxation, regulation and licensing authority under the exclusive oversight of the home state of the insured. Changes to surplus lines laws and procedures are being made in every state to accommodate the mandates adopted by the federal government. The following Bulletins and Articles contain information relative to these changes.
Federal Nonadmitted and Reinsurance Reform Act in Delaware – Bulletin No. 9 – This bulletin details NRRA implementation in Delaware.
Delaware Passes Surplus Lines Law Implementing NRRA – An article with information about changes contained in the recently passed “Delaware Nonadmitted Insurance Act” (Senate Bill 109), including information about the new Delaware Domestic Surplus Lines Insurer company license type.
New Surplus Lines Reporting Forms to Collect Fiscal Analysis Data – Bulletin No. 10 – This bulletin details information regarding the Department’s fiscal analysis and use of the SL-1903-MS and SL-1925-M reporting forms.
Data Request – Nonadmitted and Reinsurance Reform Act of 2010 (NRRA) Implementation Revenue Study – Bulletin No. 11 – This bulletin is regarding a data request for all nonadmitted companies to report certain data to the Department for its NRRA fiscal impact study.
Revised Quarterly Surplus Lines Broker Reporting Forms and Procedures – Bulletin No. 12 – This bulletin implements the new SL-1925-Q surplus lines quarterly premium tax reporting form.
IMPORTANT: BUSINESS ENTITIES SHOULD NOT SUBMIT TAX REPORTS.
Only individua l surplus lines brokers can transact business, therefore, tax reports should only be submitted by (or on behalf of) individual surplus lines brokers.
Please Note: Form SL-1706 – Business Entity Annual Report has been eliminated.
Business entities are no longer required to make any filing.
As stated before, the federal Nonadmitted and Reinsurance Reform Act of 2010 (“NRRA”) became effective on July 21, 2011, and placed surplus lines taxation, regulation, and licensing authority under the exclusive oversight of the home state of the insured (see 18 Del. C. §1904(a)(9) for definition of home state).
The NRRA, among other changes, stipulates that:
All states made legislative changes to conform to the NRRA, including Delaware. The new “Delaware Nonadmitted Insurance Act” was enacted, which updated and changed Title 18 Chapter 19, Delaware’s existing surplus lines law, in its entirety.
Whereas in the past reports were made to the state in which the covered risk was located, the NRRA stipulates that all reporting and tax payment shall now be made to the state that is considered to be the home state of the insured. Therefore, Delaware’s surplus lines premium tax law was also changed as follows.
These rules apply to all surplus lines policies with an effective date after July 21, 2011.
IMPORTANT: In accordance with 18 Del. C. §1925 and §1926, when Delaware is determined to be the home state of the insured, the amount of tax paid to Delaware is calculated on the entire premium for the policy, not just the portion that applies to risks located within Delaware.
Delaware now collects 2% tax on 100% of the policy premium when the policy is procured for a Delaware home state insured. All surplus lines licensees should take whatever measures are necessary to ensure that the proper amount of premium tax is paid to this state when Delaware is the home state of the insured.
Delaware is considered the “home state” of the insured if any of the following conditions apply:
If none of these conditions apply to the policy, then Delaware is not the home state of the insured, and no report or tax should be sent to the Delaware Department of Insurance.
Use these tips to help determine which state is the home state of the insured and make your filing according to that state’s requirements.
OPTins is the preferred method of submission of the SL-1925-A and SL-1925-Q, including attached SL-1903-MS forms. OPTins provides immediate, secure transmission and receipt of premium tax reports and payments online. All surplus lines brokers are encouraged to use OPTins to submit their Delaware annual and quarterly premium tax forms and payments to the Department electronically. However, use of OPTins is NOT MANDATORY at this time.
Form SL-1925-A (formerly SL-1916) – CY 2011 Brokers Annual Premium Tax and Fees Report due on or before March 1, 2012.
THIS REPORT MUST BE FILED BY ALL INDIVIDUAL SURPLUS LINES BROKERS. ANNUAL REPORTS ARE ALWAYS REQUIRED FROM EACH INDIVIDUAL, EVEN IF NO BUSINESS WAS WRITTEN.
The Department’s preferred method for submission of this report is through OPTins. This report must be submitted by each individual surplus lines broker regardless of business volume or tax liability. Submit a zero report if no business was written.
The Department’s preferred method for submission of this report is through OPTins. This report must be submitted by each individual surplus lines broker. Important: Zero quarterly reports are not required.
Form SL-1903-MS (new form) – Use this paper form to report multi-state policies ONLY.
Attach one copy of this form for each multi-state policy written in a calendar quarter to the appropriate quarterly report. Use the electronic SL-1905 form to report single-state policies.
Form SL-1905 – Notice of Insurance Transaction (to be used on an occurrence basis)
IMPORTANT: Read these instructions carefully before using form SL-1905.
This form is designed to enable users to enter multiple policies on one spreadsheet then be saved as an Excel file and attached to an email for submission electronically. DO NOT submit this form in print or PDF format unless you are reporting a tax-exempt policy.
Form SL-1923 (formerly SL-1904) – Statement of Diligent Effort.
Retain this completed form in the surplus lines broker’s office with other policy materials.
Form SL-1908 – Binder ⁄ Policy Number Replacement.
Submit this form only when there is a change in the number that uniquely identifies a policy.
Prior Year Surplus Lines Broker Tax Filing Forms – Forms for amendments can be obtained by contacting Ann Fletcher.
If you are not able to use OPTins and are filing a paper form, send these tax reports and payments to:
Delaware Insurance Department
Attn: SURPLUS LINES SECTION
841 Silver Lake Blvd.
Dover, DE 19904-2465
Questions from Surplus Lines Brokers can be directed to Ann Fletcher.